Dilip Rao, Ripple’s global head of infrastructure innovation, is quoted by the Times as saying that despite RBI’s imposition of controversial restrictions on all domestic banks dealing with crypto, the bank’s recent inquiry into issuing its own central bank digital currency (CBDC) suggests that RBI might reverse its ban in the future:
“There is a great regulatory comfort with Ripple Net — particularly in the light of the Bank for International Settlements’ policy requiring central banks to have a backup for payment systems having non-similar technology.”
Last year, Ripple reportedly established an office in Mumbai, and Rao considers that countries that do not have a developed interbank network will be more receptive to a crypto-based alternative Real Time Gross Settlement (RTGS) system.
RBI’s stringent stance towards cryptocurrencies has led to a grassroots pushback and a wave of court cases in response to what is an increasingly disabling regulatory climate for domestic crypto businesses. Some prosecutors are arguing that RBI’s decision to end banks’ dealings with crypto businesses is a violation of the country’s constitution.
In April, tech investor Tim Draper warned that the move by RBI could cause a brain drain, in which Indian crypto and blockchain entrepreneurs take their businesses abroad due to stifling restrictions at home. While supportive of Prime Minister Narendra Modi’s crackdown on corruption, Draper called the government’s position on crypto “a huge mistake”.
India’s Ministry of Finance also criticized cryptocurrency as a “Ponzi scheme” without “intrinsic value” at the beginning of January.